weather icon Clear

Survey finds investors confident in markets

Nearly two-thirds of investors express confidence in the stock market, though it is still down from the first quarter of 2020.

Investor optimism improved moderately this quarter, with the Wells Fargo/Gallup Investor and Retirement Optimism Index rising 24 points to +42, about double the 14-point gain seen in the third quarter.

Still, investor optimism continues to fall well short of its first-quarter level, when the index was at a 20-year high of +138.

The Investor and Retirement Optimism Index is up this quarter specifically because investors are feeling better about the future of the economy and jobs. Close to half (48%), up from 40% last quarter, are now “very” or “somewhat” optimistic about the 12-month outlook for the economy. Optimism about the potential for unemployment to decrease is up seven-points to 40%, while optimism levels for the stock market (47%) and inflation (19%) are essentially unchanged.

The latest survey was conducted by web using the Gallup Panel, with 1,709 U.S. adults who have $10,000 or more invested in stocks or bonds, either individually or as part of a retirement or mutual fund. This quarter’s poll includes an oversample of 603 higher-income investors, defined as having $240,000 or more in household income.

“Investors were absorbing a number of significant developments in the economy, politics, and the pandemic at the time of this survey,” said Michael Liersch, head of advice and planning for Wells Fargo’s Wealth &Investment Management division. “These ranged from a new surge in COVID-19 infections and the October jobs report to the Nov. 3 elections and the very first announcements about the high effectiveness of certain COVID-19 vaccines.”

Liersch also says that while these events might have pulled investors’ mindsets in different directions, the net effect is positive, most likely because there is more perceived certainty about the future. “Human beings, in general, are ‘uncertainty reduction machines,’ so when uncertainty is reduced, people often feel better about, or more in control over, what’s to come,” he said.

In the fourth-quarter poll, conducted before the Dow Jones Industrial Average cracked the 30,000 barrier in late November, nearly two-thirds of investors surveyed (65%) say they feel “very” or “somewhat” confident that the stock market is a good way to build wealth for retirement. This percentage is similar to the 69% expressing this sentiment in Q2-2020 as well as in Q2-2019.

Similarly, 67% this quarter report feeling either neutral or optimistic about investing rather than fearful of a market downturn. Although lower than the 78% who reported feeling this way in 2018, today’s 67% remains a solid majority.

Pandemic causing caution

Still, Liersch says “the uncertainty and market volatility created by the pandemic might be causing some investors to continue to proceed with more caution than usual.”

While 69% say they have made no change to their cash versus investment allocations, 25% report they have kept a greater proportion of their money in cash since the start of the pandemic, significantly outnumbering the 6% who say they have invested a greater proportion in the markets. Even with this, 32% of investors surveyed say they feel they have too little cash on hand, compared with just 7% who say they have too much.

“Investors’ desire for cash makes sense, given that holding cash is one strategy they can employ to exert control over their financial security at a time when so much is out of people’s control,” Liersch said. “Liquidity affords people a sense of short-term control, while long term they may recognize that they should either be investing or staying the course in the markets.

“This dynamic can create a bit of inner conflict when making financial decisions for one’s ‘present’ vs. ‘future’ self. People wonder: Which one should I prioritize during times of uncertainty?”

Indeed, recognition of what is in vs. out of investors’ control is infused in much of their financial lives. Asked how much control they feel they have over various aspects of their financial security, 62% report feeling they have a lot of control over being able to reduce or stay out of debt.

This sentiment drops sharply to 30% in terms of saving for a comfortable retirement, 24% for generating the income they need to support their standard of living, 11% for preventing major investment losses and to just 3% for producing major investment gains.

Don't miss the big stories. Like us on Facebook.
Tonopah will build new $15.2M elementary near town high school

Tonopah will create a centralized learning campus for pre-k through 12-grade students by constructing a new elementary on 5.5 acres near the town’s high school.

Funding will help save endangered Pahrump poolfish

Bureau of Land Management officials have worked with other agencies over the past five years to improve habitats for the threatened fish, which can be found in three locations at the Shoshone Ponds about 30 miles south of Ely.

Fairgrounds parking lot will be used for motorcycle trainings

The Veterans of Foreign Wars Riders Group of Pahrump is expected to begin hosting motorcycle training sessions at the parking lot of the Pahrump Fairgrounds.

2 transported to hospital after crash

One person was transported by air to UMC Trauma, while another was transported to Desert View Hospital following a two-vehicle collision at the intersection of Gamebird Road and Winchester Avenue just after 11 a.m. on Tuesday, Jan. 18.

NBC exhumes Ted Binion case on ‘Dateline’ episode

Casino magnate Ted Binion was found dead in September 1998, but many believe he buried treasure at his Pahrump property.

Rise of COVID-19 cases have canceled visits at Nevada prisons

Following a sharp increase in COVID-19 infections, the Nevada Department of Corrections suspended inmate visitations until further notice. The agency did not indicate whether inmate and attorney visits are part of the suspension period.

Staffing crisis at area hospitals continues

An increasing number of sick employees and an continuing rise in COVID-19 hospitalizations have extended a staffing crisis in Southern Nevada hospitals for a second week.